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AMCON Injects N1.5bn into Ailing Arik Air

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  • AMCON Injects N1.5bn into Ailing Arik Air

The Asset Management Corporation of Nigeria (AMCON) has injected a total of N1.5 billion into Arik Air since it took over the distressed airline in February 2017.

The Chief Executive Officer of Arik Air, Captain Roy Ilegbodu, who disclosed this during an interactive session on the activities at Arik, two months after the new management team was appointed by AMCON, commended the corporation for its support.

“AMCON indeed has been very supportive with funds and that is why we are still here today. I would say that in the first couple of weeks that we took over, AMCON injected approximately N1.5 billion. Basically, that has sustained us comfortably,” he explained, while responding to questions by journalists.

Ilegbodu added: “A lot of people think that in three or four months, you can turn around an airline. But it doesn’t work so in this business. Everything is well guided because you have to make sure all the parts of the business are in order. Everything is done systematically and AMCON has supported us very well. We have been able to source spare parts and as I speak, we have spare parts arriving on daily basis.

“So, we have managed to stabilise operations and the unpaid staff have been paid salaries and we are up to date on that. A lot of the expatriates also, we have paid them up to date. As of today, we operate a fleet of about eight aircraft, but by mid-May, we would have 14 airplanes in service and we are going to maintain that number for a while.

“We don’t want to grow the operations so rapidly because it has its own setback. Our passenger number has gone up considerably and on Friday alone we lifted over 3,000 passengers. But decision has to be made on how to proceed in the future.”

According to him, a lot of the aircraft his team met on ground were “cannibalised.” This, he said, meant that what the previous management was doing was that they used spare parts from those airplanes on ground that were not functional to keep the few flying operational, which he alleged degraded the status of all the planes on ground, saying it wasn’t in line with best practice.

Ilegbodu further explained that in the last two months when his team took over operation at Arik, they have tried to regain control and slowed things down deliberately because the industry is one where safety is very critical.

“When we took over in February, we looked at what was on ground at Arik. What we met was quite interesting and disturbing also. For an airline that had about 30 aircraft on its book, they were only about 10 of them that were functional. So, one would say that AMCON’s intervention was very timely. If you look at some of the things that are on ground, you can easily deduce that the company would have folded up in a couple of months.

“Then, they were no spare parts in the stores to support the operations and you could see slow attrition in terms of aircraft fleets. They were huge bills left unpaid when we came on board which we have tried to address. This business is mainly driven by credit and a lot of people offer credit based on trust.

“So, once you start to bridge that trust, then you lose those credit facilities. Arik had reached that stage where a lot of creditors were refusing to do business on credit. Then, a lot of flights were being delayed and customer confidence dropped significantly.

“Also, by the time we started looking at the financial records, in addition to what AMCON was being owed, we noticed that they were also exposed to third party creditors. Based on that, KPMG was called in to carry out a thorough audit of its books and that process is ongoing. More revelations keep coming up daily,” he said.

Also responding to a question about talks between the federal government and some private investors on two of the airlines that had been taken over by AMCON, he said investors should be sought to help reposition the company.

He said the airline would not be in a hurry to resume international flights for now until it sorts out a lot of its debt issues.

According to the Arik Air boss, the airline still owes a group called Europe Controls about €1 million, and other international creditors that must be sorted out before it resumes international flights.

Ilegbodu however pointed out that the KPMG audit would actually give a true position of where Arik is and would enable the government to decide on what to do going forward.

However, an aviation industry expert on Tuesday decried AMCON’s continuing efforts to de-market the airline and give its former management a bad name in order to justify its takeover of the airline.

He also described the amount injected into the airline as paltry relative to its size and needs.

He said Ilegbodu was being insincere when he said Arik has no spare parts, stressing that its former management left behind spare parts valued at $150 million.

“The AMCON imposed management has been economical with the truth about so many things. Spare parts left behind by the management that the corporation removed was valued at $150 million.

“Besides, what will the paltry injection of N1.5 billion do for an airline that has been valued at $3.2 billion by Lloyd’s of London? That is like a drop in the ocean and will not make any difference.

“Also, prior to Arik’s takeover, it was flying on average 8,000 passengers a day, but that has dropped to 2,400 passengers a day all because of AMCON’s interference, so how is the airline faring better today?” he asked.

The aviation expert, who preferred not to be named, also defended the old management of the airline, saying Arik’s indebtedness had been grossly exaggerated, stressing that Arik owes AMCON N175 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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FG Reopens Osubi Airport Warri for Daylight Operations

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FG Reopens Osubi Airport Warri for Daylight Operations

The Federal Government on Monday said the Osubi Airport in Warri has been reopened for daylight operations.

The Minister of Aviation, Hadi Siriki, disclosed this in a tweet.

The airport was closed in February 2020 over mismanagement and debt allegation involving aviation service providers and airport management.

However, Oberuakpefe Afe, a lawmaker representing Okpe/Sapeie/vaie federal constituency, recently moved a motion for the Federal Government through the ministry of aviation and relevant authorities to reopen the airport for flight operations.

On Monday, Hadi Siriki said “I have just approved the reopening of Osubi Airport Warri, for daylight operations in VFR conditions, subject to all procedures, practices and protocols, including COVID-19, strictly being observed. There will not be need for local approvals henceforth.

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

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